Mortgage Forbearance
by Lisa Phillips
December 2009
by Lisa Phillips
December 2009
Forbearance is not a good option if you have an adjustable rate
mortgage (ARM) and the interest rate is not affordable. In this case
a mortgage loan modification would probably suit your needs more
appropriately. Remember, forbearance is usually a temporary
solution and will increase your monthly payments in order to bring
the amount in arrears current.
As with loan modification you may need to prove whatever caused
your financial difficulty is short term and that you are now able to
make timely payments. A hardship letter should accompany your
forbearance request. The hardship could be illness, either you or a
family member, loss of income, disability, death of a spouse or even
divorce.
In some instances, your lender may offer a special forbearance
wherein you remain in your home, without making payments and
without negative credit reporting, for a period of several months.
Most forbearance agreements will not preserve your credit rating.
Your mortgage payments will continue to be reported as “paid late”
until you bring current your total amount in arrears.
mortgage (ARM) and the interest rate is not affordable. In this case
a mortgage loan modification would probably suit your needs more
appropriately. Remember, forbearance is usually a temporary
solution and will increase your monthly payments in order to bring
the amount in arrears current.
As with loan modification you may need to prove whatever caused
your financial difficulty is short term and that you are now able to
make timely payments. A hardship letter should accompany your
forbearance request. The hardship could be illness, either you or a
family member, loss of income, disability, death of a spouse or even
divorce.
In some instances, your lender may offer a special forbearance
wherein you remain in your home, without making payments and
without negative credit reporting, for a period of several months.
Most forbearance agreements will not preserve your credit rating.
Your mortgage payments will continue to be reported as “paid late”
until you bring current your total amount in arrears.
Forbearance is an agreement between the borrower and lender that
reinstates the delinquent loan through the payment of a lump sum or
a schedule of payments over a period of time, usually no more than
12 months.
reinstates the delinquent loan through the payment of a lump sum or
a schedule of payments over a period of time, usually no more than
12 months.
The lender may add the amount in
arrears to the mortgage payment
for a short period of time until the
amount in arrears is brought
current.
Depending on the circumstances,
the lender may allow you to
negotiate a temporary suspension
of your mortgage payments,
setting aside any payments in
arrears or; the lender, may allow a
reduction in the amount of your
mortgage payment.
arrears to the mortgage payment
for a short period of time until the
amount in arrears is brought
current.
Depending on the circumstances,
the lender may allow you to
negotiate a temporary suspension
of your mortgage payments,
setting aside any payments in
arrears or; the lender, may allow a
reduction in the amount of your
mortgage payment.
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Related Topics:
- FHA Mortgage Loans, Basic Features and Loan Limits
- The Benefits of Fixed Rate Mortgages
- VA Homes Loans
- Hard Money Mortgage Loans
- Adjustable Rate Mortgage Loans
- Interest only Mortgage Loans
- Benefits of making Bi-Weekly Mortgage Payments
- Options to Foreclosure
- Stop Foreclosure with Forbearance
- How to Request a Mortgage Loan Modification
- Downpayment Assistance Listed by State
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